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Finance: Hedging your way through Brexit

Legacy Phuket Gazette

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Finance: Hedging your way through Brexit | The Thaiger
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PHUKET: There has already been a lot written in this paper – and many others – about Brexit, but I’m getting lots of questions from both sides of the investment coin, so I thought it a good idea to highlight some of the things to think about before doing anything drastic.

Are there any opportunities to exploit now that British voters have voiced their desire to leave the EU? Are there any risks that we need to hedge against?

There is no such thing as a ‘dead cert’ when delving into financial markets, so let’s explore a variety of possible scenarios and what effects they may have.

Is now the time to be moving more heavily into Euro stocks? Should you move currency into USD and EURO? Should you move currency back to GBP now that is low?

If you had a crystal ball, you could make a ton of money by knowing which move to make right now. Depending on what happens next there is a lot of money to be made. Of course there is also a lot to lose if you end up on the wrong side.

There are a few key questions to consider. Is the UK the first domino in what will be the ultimate demise of the European monetary union? Will the British government figure out a way to justify not following the wishes of the British people and remain in the EU anyway? Will Brexit go through and leave the rest of the EU intact in the long term?

The first scenario is probably the scariest for the global economy. The EU has issued mountains of debt on the premise that it is backed up by the taxation power of the entire union.

If it falls apart, EU debt becomes worthless, and every major financial institution on the planet will suffer the same. This would be disastrous – not only for European stocks and bonds – but for the global markets as well.

Having a part of your portfolio in gold and USD denominated securities is a hedge against this scenario, as a flight to safety would likely see US government bonds and gold both go up.

If the UK reneges on leaving the EU, the GBP will likely rally, as well as EU stocks in general. While many people see this as very unlikely, given that the process could take two years, I don’t think it is a risk that can be written off entirely.

Any strategy that was based on the Brexit would suffer a sharp reversal if at some point the government finds a way to cancel the exit.

The long term determination of the banking institutions to see global consolidation may be a lot stronger than most people think. However, if I was a gambling man, I would not be betting for this scenario.

If the UK is the only country to leave and the EU remains intact, then a play on Euro-based stocks would likely pay off. However, given all the risks, I think this is a time to play defensively rather than seeking opportunities.

When the opportunity arrives, it will be very clear that a serious crisis is underway and global stocks will be in free-fall.

The old saying to ‘buy when there is blood in the streets and banks are failing’ is my favorite, but we are not in that environment by any stretch of the imagination.

I have already written about getting your pension out. Other than that, if you have currency risks to the GBP or the EURO, I would try to spread that around and hedge yourself. That is the extent I would argue you should react to Brexit.

David Mayes, MBA, resides in Phuket and provides wealth management and life coaching services to expatriates around the globe, specializing in UK pension transfers. He is a regional representative of Faramond Group, located in Kuala Lumpur, Malaysia. Faramond UK is regulated by the FCA to provide advice on pensions and taxation. He can be reached at 085-335 8573 or david.m@faramond.com

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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Domestic air passenger numbers double those of January

Maya Taylor

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Domestic air passenger numbers double those of January | The Thaiger
PHOTO: Vietjet

Passenger numbers on domestic flights within Thailand have doubled within a month, rising from 4,000 in January to over 10,000 this month. Having nearly recovered to pre-pandemic levels, domestic travel plummeted once more when Covid-19 resurfaced late last year.

Apirat Chaiwongnoi from the Department of Airports says 15 of Thailand’s 29 airports are now operating domestic flights, with more expected to follow. He believes the aviation sector will continue to recover further in the coming 6 months, bolstered by the national vaccine rollout.

Around 120 domestic flights a day are now operating, which is twice the number that were operating at the lowest point in the crisis. Prior to the resurgence of the virus in December, domestic passenger numbers had recovered to 30,000 – 40,000 a day, around 80% of pre-pandemic numbers.

The DoA says airports must continue to adhere to the Covid-19 hygiene measures put in place by the Health Ministry and the Civil Aviation Authority of Thailand.

SOURCE: Bangkok Post

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